Solutions

This isn’t for everyone and many lenders won’t allow this unless we can ensure that you are not putting your mum and dad at risk.

In the current market environment, you’re likely better off making extra home loan repayments and waiting for your local property market to bounce back.

At the same time, cut unnecessary spending and budget months before you apply to refinance.

All of this will work in your favour when making your case as a borrower.

Better yet, call us on 1300 889 743 or fill in our free assessment form and we can let you know if you’re in a position to switch lenders and how to maximise your borrowng power.

Borrowing power prisoners

Problem

Investors can also be mortgage prisoners, particularly those that have bought multiple properties in the past 5 years.

The biggest painpoint has certainly been the increase to investment rates, particularly for interest only loans.

Whether you’re an investor or not, you’re borrowing power is being squeezed from both ends due to higher interest rates, rate buffers and more onerous benchmarks for living expenses:

No longer solely reliant on the Household Expenditure Method (HEM), some lenders now require you to calculate your spending on a weekly, fortnightly, monthly, quarterly and yearly basis across 37 different expenses categories.

Higher living expense figures are then applied to certain affluent postcodes and to borrowers with high household incomes.

Lenders are limiting how much rental income they will consider when assessing your income.

Solutions

You may want to consider switching from interest only to principal and interest (P&I) payments so you can qualify with more lenders at a much lower interest and at much a lower assessment rate. This is opposed to being assessed over the full loan term minus the interest only period.

If you own multiple properties, consider selling one or more properties. After seeking professional financial advice, you may want to then consider investing in assets other than real estate.

Look at your living expenses, debts and liabilities and consider reducing them or cutting them from your spending completely.

Debt consolidation is a viable option to increase your borrowing power, especially if you have a car loan, and multiple personal loans and credit cards.